educational loan organizer

Educational LoanOrganizer

Your Guide to Student Loans through theFederal Family Education Loan Program

www.mgaloan.com1-800-642-5626

TABLE OF CONTENTS

Managing Your Student Loans .................................................................................................................................................. 1Budgeting .................................................................................................................................................................................... 5Reporting Changes ..................................................................................................................................................................... 9Loan Repayment ....................................................................................................................................................................... 11Protecting Your Credit Rating ................................................................................................................................................. 21Glossary of Terms and Record Keeping ................................................................................................................................. 23

INTRODUCTION

The Federal Stafford and PLUS Master Promissory Notes (MPN) replaced the common Federal Stafford and PLUS applications and promissory notes. The MPN basically opens a line of credit with a lender for education expenses during your academic career. By signing it, you are agreeing to repay the loan under its terms and conditions and also agreeing to use the loan only for educational expenses. The prevailing interest rate, fees, and repayment terms and conditions are specified in the MPN and/or the loan disclosure statement that you will receive.

If you attend an eligible Title IV institution, you may be able to take advantage of the serial loan feature of the MPN. The serial loan feature of the MPN allows you the option to sign one MPN, which could potentially cover all loans requested over a maximum ten (10) year time period. You do not have to sign a new MPN if your school or guarantor changes; however, you will need to sign a new MPN if you use a new lender. If you attend an institution that is not eligible or elects not to participate in the serial loan feature of the MPN, you must complete a new MPN each time you request a new loan.

OmbudsmanThe U.S. Department of Education has a Student Loan Ombudsman’s Office. This office was established to help resolve disputes between borrowers and their schools, lenders, guarantors, or loan servicers. The Ombudsman’s office can be contacted at: U.S. Department of Education FSA Ombudsman 830 First Street, N.E., Fourth Floor Washington, DC 20202-5144

Their toll-free telephone number is 1-877-557-2575, or you can access their Web site at www.fsahelp.ed.gov or www.ombudsman.ed.gov.

Additional information concerning student loans, grants, and scholarships is available on the Michigan Guaranty Agency’s Web site located at www.mgaloan.com.

National Student Loan Data SystemThe National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid. It receives data from schools, agencies that guarantee loans, the Federal Direct Loan Program, the Pell Grant Program, and the other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and Pell grants that are tracked through their entire cycle; from aid approval through closure. You may visit the Web site of the NSLDS at www.nslds.ed.gov or call the Federal Student Aid Information Center toll-free at 1-800-4-FED-AID or TDD 1-800-730-8913.

In order to use the NSLDS Student Access Web site, you will need to provide your Social Security Number (SSN), the first two letters of your last name, your date of birth, and your PIN (formerly known as EAC). You can use the Web site to make inquiries about your Title IV loans and/or Pell grants. The site displays information on loan and/or grant amounts, outstanding balances, loan statuses, and disbursements.

Educational Loan Organizer, Page 1

MANAGING YOUR STUDENT LOANSA student loan is an investment in your future. It provides you an opportunity to obtain an education that might otherwise be beyond your financial reach. With a loan comes responsibilities that exist while you are enrolled in school, as well as during your repayment period. Borrowing money through the Federal Family Education Loan Program to finance your education will have long-term implications for your financial future. The Michigan Guaranty Agency (MGA) has compiled this folder to help explain what you need to know about borrowing and repaying your student loans.

Things to Consider Before You BorrowQualifying for a student loan may be a fairly easy process, but repaying it is more difficult. Before borrowing, consider the following items:

• A LOAN MUST BE REPAID. It is not a grant. Signing the promissory note is a legal and binding promise to repay a loan. Read your note for terms and conditions of the loan. Repayment is expected even if you do not complete your education, fail to complete your program of study within the regular time for program completion, are dissatisfied with your education, do not graduate, or do not find a job after you complete your program. Failure to repay your educational loans in a timely manner can affect your credit rating and your future ability to borrow for other purposes such as a car or a house.

• Know when repayment begins. Some loans go into repayment shortly after final disbursement; other loans have a period where payments of principal and/or interest are deferred. Your lender will provide a repayment schedule which lists repayment terms and conditions.

• Check your finances before you apply for a loan. Consider how much you and/or your family can contribute toward your education. Apply for other financial aid resources such as scholarships, grants, and work opportunities through your college financial aid office.

• Consider your expected salary and other expenses when you leave school. Can you afford monthly educational loan payments ranging from $250 to $600 over a ten (10) year repayment period? Too large a debt may prevent the “good life” you expected to experience after graduation. THE MORE YOU BORROW, THE MORE YOU PAY EACH MONTH.

• If you must borrow, borrow only what you need and what you can reasonably expect to repay. Current information regarding educational loan eligibility and applications can be obtained from the financial aid office at your school. The financial aid office must advise you of the effect of accepting the loan on eligibility or other types of student financial assistance.

• Borrower benefits may differ between lenders. Check with lenders regarding their borrower benefits.

How Much Can I Borrow?Federal Stafford Loans (Subsidized and Unsubsidized)Maximum Annual Loan Amounts — Federal Stafford Loans1, 2 (including Federal Direct Loans)

Borrower’s Academic LevelDependent 3 Student Independent Student

Sub + Unsub Subsidized Unsubsidized Total1st Year Undergraduate Student one academic year in length4 $5,500 $3,500 + $6,000 = $9,500

2nd Year Undergraduate Student one academic year in length4 $6,500 $4,500 + $6,000 = $10,500

3rd Year and RemainingUndergraduate Student one academic year in length4

$7,500 $5,500 + $7,000 = $12,500

Graduate or Professional Student N/A $8,500 + $12,000 = $20,500

1 Eligible students in certain health professions may be qualified to receive increased unsubsidized loan amounts. Check with your school.2 Effective for loans disbursed on or after July 1, 2008, and with a loan period end date greater than July 1, 2008.3 For dependent students whose parents do not qualify under the PLUS Program, the amount a student can borrow under the unsubsidized

program is the same as for an independent student.4 Loan limits may be subject to proration. Check with your school for eligible loan limits.

Man

agin

g Yo

ur S

tude

nt L

oans


Maximum Aggregate Loan Amounts — Federal Stafford Loans *

Borrower’s Academic Level Subsidized and Unsubsidized

Dependent Undergraduate Student $31,000

Independent Undergraduate Student $57,500

Graduate or Professional Student $138,500 * The aggregate loan limits also include any portion of a borrower’s Consolidation loan which was used to repay a Federal Stafford loan.

Federal Grad PLUS LoansIf you have applied for a Federal Grad PLUS loan (available only to graduate and professional students), the financial aid office has advised you of your eligibility to borrow Federal Stafford loans and the differences between the terms and conditions of Stafford and PLUS loans. If you allow the interest to be capitalized, you will be charged interest on top of interest when your loans enter repayment. It is your option to pay the interest on a Grad PLUS loan while you are in school.

Academic Year All Grade Levels

Graduate/Professional Cost Minus Aid (no cap)

How Much Can My Parent(s) Borrow on My Behalf?Federal PLUS Loans

Academic Year All Grade Levels

Undergraduate Cost Minus Aid (no cap)

Can You Afford Your Student Loans?You will be entering a very financially demanding period of your life. Your new earnings will quickly disappear as you find a place to live, build a wardrobe, buy a car, pay for meals, as well as make monthly payments on your educational loans. Your ability to repay your student loans depends upon: your future income; your monthly living expenses; and your total educational loan debt. Some students borrow the maximum amount each year thinking they can afford the future monthly payments. However, after leaving school, jobs may be difficult to find and you may not start at the top of the pay scale. Also, the cost of living is often more than expected.

Estimated Average Entry Level SalariesSource: www.salary.com, January 2009

The following salaries may be lower or higher depending on state and location. *Note: www.salary.com is a helpful Web site to view potential salaries by geographic area

Annual Occupation Gross IncomeAccountant $41,643Accounting Clerk $30,466Advertising Clerk $38,874Aircraft Electrician $42,220Auditor-Internal $48,863Benefits Clerk $35,379Branch Management Trainee $36,521Broadcast Technician $41,182Budget Analyst $47,591CAD Drafter $41,001Cartoonist/Animator $51,927Chauffeur $31,048Claims Clerk $29,753Commercial Loan Officer $64,457Computer Maintenance Technician $41,912Computer Operator $34,553Computer Programmer $53,634Conservation Technician $38,615Consumer Loan Collection Clerk $24,277Consumer Loan Processor $29,908Copywriter $41,835Data Control Clerk $29,509Dispatcher $35,143E-Commerce Customer Svc. Rep. $32,979

AnnualOccupation Gross IncomeEnvironmental Engineering Technician $41,748Financial Analyst $47,223Fire Fighter $40,117Loan Processing Clerk $32,532Massage Therapist $46,932Mechanic-Airframe and Engine $48,039Nurse-Licensed Practical $39,185Nurse-Registered $61,314Operations Clerk $23,941Payroll Clerk $33,684Physical Therapist $69,548Proofreader $41,153Public Relations Specialist $43,541Reporter $30,949Restaurant Manager-Assistant $37,373Secretary $31,672Social Worker-BSW $43,808Tax Accountant $47,318Teacher-Elementary $50,110Teacher-High School $51,252Telecommunications Analyst $46,971Veterinary Assistant $26,383Web Designer $47,775


Potential Earnings vs. Loan Debt

Gross Annual Salary After Graduation Gross Monthly Salary Amount Borrowed* Monthly Payment*

$10,000 $ 833 $5,200 $ 6015,000 1,250 7,800 9020,000 1,667 10,500 12125,000 2,083 13,100 15130,000 2,500 15,750 18135,000 2,917 18,300 21140,000 3,333 21,000 24245,000 3,750 23,600 27250,000 4,167 26,200 302

* The amount you can afford and your monthly payment are approximate, and are based on an 6.8% interest rate and a ten (10) year repayment term.

Getting OrganizedAccepting an educational loan means accepting personal responsibility for the timely repayment of your loan. You may not realize the many responsibilities involved in managing a large debt like a student loan. Student loans have many of the same legal requirements as consumer loans. How well you manage your loan depends upon how seriously you accept responsibility.

To properly manage your student loan, you should do the following:1. Start a file. Keep all loan documents for future reference. Keep application, promissory note, disclosure

statement, deferment forms, and all other correspondence.2. Always keep your lender and school officials informed in writing of any name, address, enrollment

status, and school changes. Dropping below half-time, withdrawing, or extending your studies changes the date your first payment is due.

3. Keep documentation. If you telephone or write your lender regarding changes to your student loan status, keep documentation and follow up within six (6) weeks if you have not received confirmation of the requested change. Your lender relies on you for current information.

4. For information regarding your rights and responsibilities, contact your lender, school, servicer, or MGA.

Key Points• Before you borrow, know what your loan payments will be and be sure you can afford the payments you

are planning to undertake.• Keep a file of all loan documents and correspondence.• Keep your school and lender informed of changes in your name, address, or student enrollment status.


BUDGETING

Deciding Whether to Borrow AgainBefore you take out another loan, ask yourself:

• Instead of borrowing, what other sources such as grants, financial aid, or part-time work are available?• If I need to borrow, what is the minimum amount I need?• What are the advantages of staying with the same lender and guarantor?• How much will my monthly payments increase if I borrow again?• Considering my future salary potential, what size loan payments will fit into my budget?

If you are an undergraduate student, plan to keep your monthly student loan payments to no more than 8% of your gross monthly income.

If you are a graduate student, plan to keep your monthly student loan payments to no more than 15% of your gross monthly income.

A variety of calculators are available on our Web site (www.mgaloan.com) to help you manage your money.

Borrowing from the Same Lender and Guaranty AgencyIf you must borrow again, it is recommended that you stay with the same lender and guaranty agency. Borrowing from the same lender means you notify only one lender or servicer when you change your name, address, enrollment status, or school. Borrowing from more than one lender could increase your total monthly payments and make it more difficult to budget your money successfully. If this does happen to you, upon repayment, consolidation is an option.

Although your guaranty agency keeps records of the loans it guarantees, your lender maintains all specific information regarding your loan. Contact your lender for this information.

Saving on Your Total Interest Payment Students who pay interest on their loans while in school can save on the total interest paid over the life of the loan, and also realize lower monthly payments after they leave school. See the chart on page 6.

Budget Planning

Begin to manage your money today to ensure your future ability to successfully allocate what may be a limited income among an OVERWHELMING number of expenses. Use the worksheet on page 7 to determine the total amount of student loan debt you will be able to handle and still cover your other living expenses.

Bud

getin

g


ESTIMATED MONTHLY IN-SCHOOL INTEREST PAYMENT

ESTIMATED MONTHLY IN-SCHOOL INTEREST PAYMENT

Students who choose to pay interest on their loans while in school can save on total interest paid and also realize lower monthly payments after they leave school.

(Formula used: (Principal x Interest 12 months)

PRINCIPAL 3.40% 4.50% 5.60% 6.0% 6.25% 6.50% 6.80% 7.0% 7.25% 8.50% 3,500 10.00 13.00 16.00 17.00 18.00 19.00 20.00 20.00 21.00 25.00 4,000 11.00 15.00 19.00 20.00 21.00 22.00 23.00 23.00 24.00 28.00 4,500 13.00 17.00 21.00 22.00 23.00 24.00 25.00 26.00 27.00 32.00 5,000 14.00 19.00 23.00 25.00 26.00 27.00 28.00 29.00 30.00 35.00 6,000 17.00 23.00 28.00 30.00 31.00 32.00 34.00 35.00 36.00 42.00 7,000 20.00 26.00 33.00 35.00 36.00 38.00 40.00 41.00 42.00 50.00 8,000 23.00 30.00 37.00 40.00 42.00 43.00 45.00 47.00 48.00 57.00 9,000 26.00 34.00 42.00 45.00 47.00 49.00 51.00 52.00 54.00 64.00 10,000 28.00 38.00 47.00 50.00 52.00 54.00 57.00 58.00 60.00 71.00 12,000 34.00 45.00 56.00 60.00 62.00 65.00 68.00 70.00 72.00 85.00 15,000 43.00 56.00 70.00 75.00 78.00 81.00 85.00 87.00 91.00 106.00 20,000 57.00 75.00 93.00 100.00 104.00 108.00 113.00 117.00 121.00 142.00 23,000 65.00 86.00 107.00 115.00 119.80 125.00 130.00 134.00 139.00 163.00 30,000 85.00 113.00 140.00 150.00 156.00 162.00 170.00 175.00 181.00 212.00 40,000 113.00 150.00 187.00 200.00 208.00 217.00 227.00 233.00 242.00 283.00 46,000 130.00 173.00 215.00 230.00 240.00 249.00 261.00 268.00 278.00 326.00 50,000 142.00 188.00 233.00 250.00 260.00 271.00 283.00 292.00 302.00 354.00 55,000 156.00 206.00 257.00 275.00 286.00 298.00 312.00 321.00 332.00 390.00 65,500 186.00 246.00 306.00 327.00 341.00 355.00 371.00 382.00 396.00 464.00

NOTE: Most lenders/servicers mail statements on a quarterly basis, but the interest may be paid monthly with arrangements made through the lender/servicer.

EXAMPLE 1 - Carol borrows $18,000 total during her four years in school and pays monthly interest payments while in school. Monthly interest payment based on 6.8%: 1st Year--1st Loan $ 23.00 based on $4,000 borrowed 2nd Year--2nd Loan $ 45.00 based on an additional $4,000 borrowed

3rd Year--3rd Loan $ 74.00 based on an additional $5,000 borrowed 4th Year--4th Loan $102.00 based on an additional $5,000 borrowed

Total interest paid over four years during school = $2,928.00 Repayment Monthly payment (principal and interest) based on a ten (10) year payback = $207.14 Monthly payment if interest had not been paid during school = $240.84 Total amount paid for the loan = $24,856.80 Total amount of loan if interest had not been paid during school = $28,900.80 Carol saves $1,116.00 in interest over ten (10) years by making interest payments during school. EXAMPLE 2 - John borrows $9,000 total during his four years in school and pays monthly interest payments while in school. Monthly interest payment based on 6.8%: 1st Year--1st Loan $ 6.00 based on $1,000 borrowed 2nd Year--2nd Loan $ 17.00 based on an additional $2,000 borrowed

3rd Year--3rd Loan $ 34.00 based on an additional $3,000 borrowed 4th Year--4th Loan $ 51.00 based on an additional $3,000 borrowed

Total interest paid over four years during school = $1,296.00 Repayment Monthly payment (principal and interest) based on a ten (10) year payback = $103.57 Monthly payment if interest had not been paid during school = $118.49 Total amount paid for the loan = $12,428.40 Total amount of loan if interest had not been paid during school = $14,218.00 John saves $493.60 in interest over ten (10) years by making interest payments during school.

BENEFITS OF PAYING INTEREST WHILE IN SCHOOL Monthly payments are lower during repayment

Total interest paid is less


YOUR BUDGET WORKSHEET

Educational Loan DebtAmount Borrowed to Date

Federal Stafford Loan (subsidized) $Federal Stafford Loan (unsubsidized)Federal Perkins LoanGraduate/Professional PLUS LoanOther Educational Loans

Total $Monthly Loan Payment

(see page 12—Sample Loan Repayment Schedule) $Estimated IncomeGross Annual Income $ ________________ Gross Monthly Income $

(see page 3—Estimated Average Entry Level Salaries)Net Monthly Income (take-home pay) $

(gross monthly income minus deductions)Estimated Monthly Expenses

Rent/Mortgage Payments $UtilitiesFoodCar Expenses

InsurancesClothingMedicalCredit CardsSavingsMiscellaneous ExpensesMonthly Student Loan Repayment

Total Monthly Expenses $Net Disposable Income $

(net monthly income minus total monthly expenses)

The net disposable income is your discretionary or available monthly spending income after all your expenses have been deducted. Your ability to repay a loan will be directly affected by your monthly income after graduation. Your income will be determined by the type of career you select and by your average living expenses.


Debt Management

Taking the time to plan for repayment of your student loan now can save you hundreds of dollars in interest costs and possible harm to your credit. The following are ways that you can plan for successful debt management and repayment of your student loans:

• Organize all student loan documents in a folder that you have easy access to.• Estimate your monthly student loan payments by using a repayment calculator. • Choose a repayment plan that creates a monthly payment you can afford, but also repays your loan as quickly as

possible, so you avoid paying additional interest.• Develop a realistic monthly budget based on your minimum salary requirement and expenses, including your monthly

student loan payment.• Ask your lender about starting automatic deduction of your loan payments from your bank account to guarantee on-

time payment.

• You should limit the amount of other types of debt, particularly credit card debt, while you are repaying your student loans.

Key Points

• Consider your expected income and monthly living expenses before you burden yourself with too large a debt.

• Staying with one lender and guaranty agency helps you manage your loans more easily.

• Paying interest on your loan(s) while in school can save you money in the long run.

• Only borrow when necessary.

• Taking time to plan for successful debt management now can save you money and prevent possible harm to your credit in the future.

WARNING: Expensive debts may be hazardous to your “future dreams.”


REPORTING CHANGES

Many borrowers think they do not have to worry about managing their educational loans until they graduate or finish school. NOT TRUE. If you transfer schools, drop credits or extend your studies, YOU are responsible for keeping your loan in good standing and for reporting certain changes.

Schools periodically update enrollment status, but YOU ultimately are responsible for meeting the terms of your promissory note. Otherwise, your loan can go into repayment without your knowledge, become delinquent, and then be placed in default. Keep your lender and current school informed of any name, address, enrollment status, and school changes.

Avoid problems by immediately notifying your lender and current school in writing if you:• Change your name.• Change your address. Do not assume that filing an address change with the post office is enough.• Change your telephone number.• Change your Social Security Number (SSN).• Fail to enroll for the loan period certified.• Transfer to a new school.• Drop below half-time enrollment, withdraw, or graduate.• Have graduation date changes.

Graduating, Dropping Credits, or Leaving SchoolDo not wait for your lender to contact you. If you graduate, leave school, or drop below half-time enrollment, arrange a repayment schedule.

The financial aid office must advise you of the definition of half-time enrollment at your school, during regular terms and summer school. If your enrollment status drops to less than half-time, you no longer qualify for in-school deferment of your loan payments, and you either begin your grace period or your loans enter repayment. During your grace period, you are not required to make payments, although unsubsidized interest will continue to accrue.

Transferring Schools or Extending EnrollmentLenders use the anticipated graduation date listed on your most recent loan application to put your loan into repayment unless otherwise advised by the school. If the date you complete your studies is different because you transfer to another school or extend your studies, inform your lender. If you transfer to another school, inform your lender . . . even if you do not get another loan . . . so that enrollment verification can be obtained. Otherwise, you may be billed while you are still in school. Request an extension by completing an in-school deferment form from your servicer or lender and have the school mail it to your servicer or lender.

Key Points• Contact your lender in writing when you change your name, address, telephone number, SSN,

enrollment status, school or fail to enroll for the loan period certified.• Always keep copies of all correspondence relating to your loans for future reference.• Avoid unexpected early repayment by informing your lender if you transfer schools, even if you

don’t take out another loan, or if you change the date you expect to complete your studies.

Rep

ortin

g C

hang

es


LOAN REPAYMENT

Beginning RepaymentWhen you applied for a student loan, YOU SIGNED A LEGAL AND BINDING NOTE to repay your lender. As you leave school, it is important that YOU FULFILL THIS OBLIGATION.• Repayment is YOUR responsibility.• Contact your lender to arrange repayment of your loan and be aware that you are able to prepay all

or part of your loan(s) without penalty.• Know when your first payment is due.• Explore alternative repayment options with your lender.

Contact Your Lender and Arrange RepaymentImmediately after dropping below half-time, leaving, or graduating from school, contact your lender regarding:• Available Repayment Options: There are many repayment choices which are available to you. You will

find a brief description of them on pages 13-14. See page 15 for a more in-depth financial breakdown of your choice. Study options carefully and discuss them with your lender. There IS a repayment plan that will best meet your needs.

• A Repayment Schedule: You are allowed at least a six-month grace period on Stafford loans to arrange a repayment schedule and to gain employment. The schedule lists repayment terms and conditions.

• A Deferment: Deferments are used after your grace period, if applicable. Contact your lender for specific information regarding the types of deferments available.

• A Forbearance or Hardship Deferment: If you are willing but unable to meet your repayment obligation, contact your lender. You may be eligible for a full or partial discharge, forgiveness, or cancellation of your federal student loan(s) under special circumstances.

• In-School Verification: Submit enrollment documentation from your new school to your lender if you transfer schools before the end of your grace period.

Your lender may transfer or sell your loan to a secondary market or employ a servicing agency to disburse and/or service your loan. If your loan is transferred from the original lender to a new holder, you will send all payments and information to the new holder. You will be advised of the transfer by mail, so keep your lender informed of your current address. Otherwise, you will be unaware of the transfer or sale, and your loan could become delinquent.

NOTE: The terms of your promissory note will remain the same even if your loans are transferred or sold.

Loa

n R

epay

men

t


Sam

ple

Loan

Rep

aym

ent S

ched

ule

Loan

Am

ount

# of

Pmts

Pmt

Fina

nce

Cha

rge

@3.

40%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@4.

50%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@4.

72%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@5.

60%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@ 6.0%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@ 6.8%

In

t. R

ate*

Pmt

Fina

nce

Cha

rge

@8.

25%

In

t. R

ate*

3,50

084

$50.

00$4

07$5

0.00

$568

$50.

00$6

02$5

0.00

$748

$50.

00$9

32$5

0.00

$971

$50.

00$1

,290

4,00

0 91

50

.00

542

50.0

0 76

5 50

.00

813

50.0

0 1,

019

50.0

0 1,

286

50.0

0 1,

344

50.0

0 1,

827

4,50

010

550

.00

702

50.0

01,

000

50.0

01,

065

50.0

01,

350

51.3

21,

659

51.7

81,

715

55.1

92,

123

5,00

0 12

0 50

.00

887

51.8

1 1,

219

52.3

5 1,

282

54.5

1 1,

541

57.0

2 1,

844

57.5

4 1,

905

61.3

2 2,

360

5,50

012

054

.12

996

57.0

01,

340

57.5

81,

411

59.9

61,

696

62.7

32,

028

63.2

92,

096

67.4

52,

596

7,50

0 12

0 73

.81

1,35

8 77

.72

1,82

8 78

.52

1,92

3 81

.76

2,

312

85.5

4 2,

765

86.3

1 2,

857

91.9

8 3,

539

8,50

012

083

.65

1,53

988

.09

2,07

188

.99

2,18

092

.66

2,62

196

.94

3,13

497

.81

3,23

910

4.25

4,01

1

9,00

0 12

0 88

.57

1,62

9 93

.27

2,19

3 94

.23

2,30

8 98

.12

2,77

4 10

2.65

3,

318

103.

57

3,42

9 11

0.38

4,

247

10,5

0012

010

3.33

1,90

110

8.82

2,55

810

9.93

2,69

311

4.47

3,23

711

9.76

3,87

112

0.83

4,00

112

8.78

4,95

5

12,0

00

120

118.

10

2,17

2 12

4.36

2,

924

125.

64

3,07

7 13

0.82

3,

700

136.

86

4,42

5 13

8.09

4,

572

147.

18

5,66

2

15,0

0012

014

7.62

2,71

515

5.45

3,65

515

7.05

3,84

716

3.53

4,62

417

6.08

5,53

117

2.62

5,71

518

3.97

7,07

8

20,0

00

120

196.

83

3,62

0 20

7.27

4,

873

209.

40

5,12

9 21

8.04

6,

166

228.

11

7,37

4 23

0.16

7,

619

245.

30

9,43

7

23,0

0012

022

6.36

4,16

323

8.36

5,60

524

0.81

5,89

825

0.75

7,09

026

2.33

8,48

026

4.68

8,76

228

2.10

10,8

52

30,0

00

120

295.

25

5,43

1 31

0.91

7,

310

314.

10

7,69

3 32

7.06

9,

248

342.

11

11,0

61

345.

24

11,4

29

367.

95

14,1

56

40,0

0012

039

3.17

7,24

141

4.55

9,74

741

8.80

10,2

5743

6.08

12,3

3145

6.22

14,7

4846

0.32

15,2

3949

0.61

18,8

73

46,0

00

120

452.

72

8,32

7 47

6.73

11

,209

48

1.63

11

,796

50

1.50

14

,181

52

4.66

16

,960

52

9.36

17

,525

56

4.20

21

,704

50,0

0012

049

2.09

9,05

151

8.19

12,1

8352

3.51

12,8

2154

5.11

15,4

1457

0.28

18,4

3557

5.40

19,0

4861

3.26

23,5

92

55,0

00

120

541.

29

9,95

6 57

0.01

13

,401

57

5.86

14

,103

59

9.62

16

,955

62

7.31

20

,278

63

2.94

20

,953

67

4.58

25

,951

60,0

0012

059

0.50

10,5

6162

1.83

14,6

2062

8.21

15,3

8665

4.13

18,4

9668

4.34

22,1

2269

0.48

22,8

5873

5.91

28,3

10

65,5

00

120

644.

63

11,8

57

678.

83

15,9

60

685.

79

16,7

96

714.

09

20,1

92

747.

07

241.

50

753.

77

24,9

53

803.

37

30,9

05

*Fig

ures

in th

is co

lum

n in

dica

te a

ppro

xim

ate

tota

lint

eres

t am

ount

you

will

pay

ove

r the

life

of y

our l

oan.

NO

TE:

Min

imum

mon

thly

pay

men

t is $

50.

Borro

wer

s with

var

iabl

e in

tere

st ra

tes s

houl

d co

ntac

t the

ir le

nder

s to

dete

rmin

e cu

rrent

rate

s and

/or m

onth

ly p

aym

ent a

mou

nts.


Loan Repayment OptionsMaking the right choice about your repayment options can give you an advantage in meeting your future loan debt obligations. Your minimum monthly payment will depend on the type of loan and amount borrowed, but generally will not be less than $50 per month. You must repay your loan(s) within ten (10) years unless your loans are consolidated or you have selected special repayment options such as income-sensitive repayment, graduated or extended repayment, or income-based repayment, or have qualified for a deferment or forbearance. You may request a shorter repayment schedule and/or change repayment plans. A brief description of the repayment choices for both the Federal Family Education Loan Program (FFELP) and the Federal Direct Loan Program (FDLP) are listed below. For more detailed information, please refer to MGA’s brochure, “Loan Repayment Options.” (Contact your school or MGA for a copy.)

Standard Repayment• Most common repayment option in both FFELP and FDLP.• Fixed monthly payments of at least $50 and loan(s) are repaid in full within ten (10) years, excluding periods

of deferment or forbearance.• Well-suited for borrowers with loan balances of $10,000 or less or for borrowers with higher loan balances

and sufficient income to make monthly payments.• Minimizes total interest charges, offers a stable payment schedule, and secures a faster payoff.

Graduated Repayment• Available for both FFELP and FDLP borrowers.• Monthly payment amount will increase over time, but no payment will be more than three times greater than

any other payment.• Appealing to borrowers with at least $10,000 in loans, those who have other financial obligations requiring

attention, or whose incomes start low but increase steadily.• Lower initial payments with a predictable schedule, but the borrower will pay higher interest costs than under

the Standard Repayment option.

Extended Repayment Plan (FFELP)• Available to first-time FFELP borrowers on or after October 7, 1998.• Loans must total $30,000 or more.• Loan repayment has a fixed annual or graduated repayment amount paid over an extended period of time,

with a maximum of 25 years.

Extended Repayment Plan (FDLP)• Available for Stafford and PLUS loans.• Appropriate for borrowers with loan balances of $10,000 or more or for borrowers who are facing monetary

difficulties and want to reduce their monthly payments.• Reduces monthly payments, providing long-term budget relief, although long-term interest costs will rise

substantially.

Income-based Repayment PlanEffective July 1, 2009, Stafford, Grad PLUS, and some Consolidation loan borrowers who meet the definition for Partial Financial Hardship will be able to limit their monthly payment to 15 percent of the amount by which adjusted gross income exceeds 150 percent of the poverty line applicable to the borrower’s family size.


Income-sensitive Repayment• Available to FFELP borrowers.• Attractive to borrowers with loan balances of $10,000 or more, those at risk of defaulting, or those anticipating

initially low incomes which are expected to increase as time passes.• Repayment terms can be adjusted annually to adapt to income changes, but by reducing early payments and

extending the repayment period, long-term interest costs will increase.• Requires an annual eligibility determination based on the borrower’s income.• Extends the permissible income-based repayment period beyond ten (10) years regardless of size of debt.• May be canceled after a total of 25 years if the borrower qualifies as being economically challenged.

Income-contingent Repayment• Available to FDLP Stafford borrowers only.• Appealing to borrowers with loan balances of $10,000 or more, those at risk of defaulting, or those anticipating

initially low incomes that are expected to increase as time passes.• Payments rise and fall with income changes, but borrowers with low or modest incomes and large loan

balances may experience a major negative amortization and incur extensive interest expenses.

Loan Consolidation• Available to both FFELP and FDLP borrowers.• For borrowers with large educational debts, because it allows borrowers to combine multiple educational

loans into a single loan.• Lower monthly payments; up to 30-year repayment period.• Longer repayment period means more interest paid.• Consolidation loans may be prepaid without penalty.

Consolidation loans are not for everyone. Borrower benefits may differ between lenders. Before choosing loan consolidation, review all options to be sure it’s the right choice. You may be able to change your Consolidation loan repayment plan. Depending on what types of loans you consolidate and when you consolidate, you may lose your grace period, deferment options, as well as loan forgiveness benefits and loan cancellation.

Whatever loan repayment option you choose, at some point you may find yourself unable to meet your debt obligation. CONTACT YOUR LENDER AT ONCE and ask about a deferment or forbearance. See charts on page 17 and 18.

Deferments and Forbearances• Provide relief in both FFELP and FDLP for borrowers who find it hard to make monthly payments.• Allow temporary postponement, suspension, or reduction of payments.• Help borrowers avoid defaulting on educational loans.• May increase long-term interest costs.• Can be used with all previously described repayment options.

Loan Discharge, Forgiveness, and CancellationA loan discharge, forgiveness, or cancellation releases a borrower from all obligations to repay the loan. A borrower may be eligible for a full or partial discharge of federal student loan(s), under the following circumstances:• If the borrower dies.• If a physician certifies that the borrower is totally and permanently disabled or the Department of Veterans

Affairs has determined that the borrower meets certain disability criteria.• The borrower’s school closes and the borrower is unable to complete the course of study.• If the borrower establishes undue hardship in an adversary proceeding before a bankruptcy court.• As a result of the crime of identity theft, the borrower’s loan was falsely certified.• If the borrower’s school falsely certified eligibility for the loan.• If the borrower’s school failed to make a required refund to the lender on the borrower’s behalf.


Examples of Debt Levels, Beginning Monthly Payments, and Total Amounts Repaid for All FFELP 1

Standard Graduated2 Extended Repayment Income-sensitive2

Repayment Income-based Repayment

Income - $25,0003Initial Debt When Loan

EntersRepayment

PerMonth Total

PerMonth

PerMonth

after two years Total Per Month Total

PerMonth

PerMonth

after two years Total

FirstMonth

10th year payment

Max Monthly payment Total

$2,500 $50.00 $2,948 $N/A $N/A $N/A $N/A $N/A $N/A $N/A $N/A $28.77 $28.77 $28.77 $3,452

5,000 57.54 6,905 N/A N/A N/A N/A N/A N/A N/A N/A 50.00 50.00 57.54 7,017

7,500 86.31 10,357 N/A N/A N/A N/A N/A N/A N/A N/A 50.00 50.00 86.31 11,882

10,000 115.08 13,810 79.02 96.07 14,556 N/A N/A 83.33 126.09 14,105 50.00 102.28 115.08 18,389

15,000 172.62 20,715 118.53 144.10 21,833 N/A N/A 83.33 203.60 21,545 50.00 102.28 172.62 36,331

20,000 230.16 27,619 158.04 192.14 29,111 N/A N/A 83.33 281.10 28,985 50.00 102.28 230.16 40,525

25,000 287.70 34,524 197.54 240.16 36,389 N/A N/A 83.33 358.60 36,425 50.00 102.28 267.42 41,325

30,000 345.24 41,429 237.05 288.19 43,667 208.22 62,467 83.33 436.10 43,865 50.00 102.28 267.42 41,325

40,000 460.32 55,239 316.07 384.26 58,222 277.63 83,289 83.33 591.10 58,745 50.00 102.28 267.42 41,325

50,000 575.40 69,048 395.09 480.33 72,778 347.04 104,109 83.33 746.10 73,626 50.00 102.28 267.42 41,325

75,000 863.10 103,572 592.63 720.49 109,167 520.55 156,168 83.33 1,133.61 110,826 50.00 102.28 267.42 41,325

100,000 1150.80 138,096 790.18 960.61 145,556 694.07 208,223 83.33 1,521.11 148,026 50.00 102.28 267.42 41,325

1Payments are calculated using the repayment interest rate of 6.8 percent.2Under Graduated repayment and Income-sensitive repayment the monthly payment amount will increase every two years throughout the repayment schedule.

3Assumes a 4 percent annual income growth (Source: Census Bureau), a discount rate of 5.8 percent, a family size of two, up to $31,000 Subsidized Stafford and the remainder Unsubsidized Stafford. Any outstanding eligible loan balance is forgiven after 25 years.

A borrower may be eligible for forgiveness of a portion of the outstanding Stafford or PLUS loan indebtedness based on certain service as a teacher or in other defined areas of national need. A borrower may qualify for full or partial cancellation of outstanding Perkins loan debt based on service in certain occupations.

The U.S. Department of Education has provided additional information on deferment, forbearance, loan cancellation, and forgiveness in the publication Funding Education Beyond High School: The Guide to Federal Student Aid. To view this publication, visit www.studentaid.ed.gov.


Repayment Guidelines

Federal Stafford Loans — SubsidizedPayment of principal and interest on student loans where the federal government pays the interest (subsidized) begins approximately six (6) months after enrollment ceases to be at least half-time (grace period).

Federal Stafford Loans — UnsubsidizedPayment of principal on student loans where the federal government does NOT pay interest (unsubsidized) begins approximately six (6) months after enrollment ceases to be at least half-time (grace period); however, the borrower is responsible for interest payments once the loan is disbursed.

You must pay or capitalize interest on unsubsidized loans regardless of enrollment status. If you allow interest to be capitalized, you will be charged interest on top of interest when your loans enter repayment. It is your option to pay the interest on an unsubsidized Stafford loan while you are in school. (See chart on page 6 for information on paying interest while in school.) If you pay qualifying interest on your federal student loans during a tax year, you may be eligible to deduct all or a portion of it from your federal income tax liability. See Publication 970, Tax Benefits for Education.

Federal Supplemental Loans for Students (SLS)The Federal SLS Loan Program was eliminated effective with loan periods beginning on July 1, 1994. However, those borrowers with active SLS loans should continue to follow the repayment guidelines. Payment of principal and interest on a Federal SLS loan began within 60 days after the date of final disbursement. While in school, a deferment of principal and interest may be authorized by the lender. SLS borrowers who also have a Stafford loan may defer payment of principal during the six-month grace period; however, interest must be paid to the lender or capitalized during this period.

Key Points• Be sure to contact your lender whenever you have a problem or question.• Always inform your lender of changes in name, address, telephone number, SSN, enrollment status, school,

or fail to enroll for the loan period certified. Loans can be defaulted without your knowledge if your lender is unable to contact you.

• Your lender schedules your first payment based on the anticipated graduation date listed on your most recent application unless otherwise advised by your school. Inform your lender of any change in your graduation date.

• Keep a copy of your loan application, promissory note, disclosure statement, deferment forms, and all other correspondence to prevent payment disputes in the future.

• Your original lender may transfer or sell your loan to another holder, or employ a servicing agency to handle your loan. Make all payments to the new holder.

• After you have chosen the repayment option which best fits your needs and have been making regular payments on your loan, you should periodically review the list of repayment options. Your circumstances may change over time, and a different option might answer your needs better than the original one you chose. Contact your lender to discuss the possibilities.


Deferment Options

STAFFORD AND SLS LOANS PLUS LOANS CONSOLIDATION LOANS

FORM DEFERMENT TYPE TIMELIMIT

Borrower-Based Deferments

Pre- 7/1/87

Borrower

New1

Borrower 7/1/87

to6/30/93

New2

Borrower 7/1/93

Loans Before 8/15/83

Pre- 7/1/87

Borrower

New1

Borrower 7/1/87

to6/30/93

New2

Borrower 7/1/93

Pre7/1/93

Borrower8

NewBorrower 7/1/939

In-School: Full-time none SCH

In-School: Half-time7 none

Graduate fellowship none

Rehabilitation training none

Teacher shortage 3 years EDU

Internship/Residency training 2 years

TDIS Temporary Total Disability3 3 years Armed Forces or Public Health Services4 3 years

National Oceanic and Atmospheric Administration Corps4

3 years PUB

Peace Corps, ACTION Program, and Tax-exempt organization volunteer

3 years

Unemployment 2 years UNEM Unemployment 3 years

Parental leave5 6 months PLWM Mother entering/reentering

work force 1 year

HRD Economic Hardship 3 years

In-School: Full-time none

In-School: Half-time none PLUS6

Rehabilitation training none

Military Service10 noneMIL

Post-Active Duty Students11 13months12

Note: For more detailed information regarding each deferment situation, please contact your lender.

1 “New Borrower” 7/1/87 to 6/30/93: A borrower whose first Federal Family Educational Loan Program (FFELP) loan was made on or after July 1, 1987, and before July 1, 1993, or who had an outstanding balance on a loan obtained on or after July 1, 1987, and before July 1, 1993, when he or she obtained a loan on or after July 1, 1993, or who had no outstanding balance on a Federal Consolidation loan made before July 1, 1993, that repaid a loan first disbursed before July 1, 1987.

2 “New Borrower” 7/1/93: A borrower whose outstanding FFELP loans were all made on or after July 1, 1993, and when his or her first FFELP loan was made on or after July 1, 1993, had no outstanding FFELP loans that were made before July 1, 1993.

3 A deferment may be granted during periods when the borrower is temporarily totally disabled or during which the borrower is unable to secure employment because the borrower is caring for a dependent (including the borrower’s spouse) who is temporarily totally disabled.

4 Borrowers are eligible for a combined maximum of three (3) years of deferment for service in the National Oceanic and Atmospheric Administration Corps, Public Health Services, and U.S. Armed Forces.

5 A parental leave deferment may be granted to a borrower in periods of no more than six (6) months each time the borrower qualifies.

6 Deferment for parent borrower during which the dependent student for whom the parent obtained a PLUS loan meets the deferment eligibility requirements.

7 A borrower who received a Federal Consolidation loan before July 1, 1993, that repaid a loan made before July 1, 1987, or who had an outstanding balance on a FFELP loan obtained prior to July 1, 1987, when the Federal Consolidation loan was obtained, is eligible for in-school deferment only if the borrower attends school full time.

8 A borrower with a Federal Consolidation loan made before July 1, 1993, or a borrower who receives a Consolidation loan on or after July 1, 1993, who has any outstanding FFELP loan(s) at the time of consolidation that was first distributed before

July 1, 1993. 9 A borrower who receives a Federal Consolidation loan made on or after July 1,

1993, who has no outstanding FFELP loans at the time of consolidation that were on or before July 1, 1993.

10 A deferment may be granted to a borrower who is serving active duty during a war or other military operation or national emergency (including qualifying National Guard duty). The borrower’s military service must begin on or after October 1, 2007, or include that date.

11 A deferment may be granted to a borrower called to active National or State duty who is a member of the National Guard or Reserves (including retired members) and who was enrolled at least half time at an eligible school at the time of, or within six (6) months prior to, being activated. The borrower’s military service must begin on or after October 1, 2007, or include that date.

12 A post-active duty student deferment may be granted to a borrower for a period of no more than 13 months each time the borrower qualifies. There is no limit to how many deferments of this type a borrower may receive. If a borrower is also eligible for a military service deferment, the 13-month period may run concurrently with the 180-day post-military mobilization period.

Source: Common Manual, July 2009


FOR

BE

AR

AN

CE

ELI

GIB

ILIT

Y C

HA

RT

T

YP

E

LEN

GT

H

Dis

cret

iona

ry

Finan

cial d

ifficu

lties d

ue to

perso

nal p

roble

ms w

hen t

he

borro

wer is

unab

le to

make

regu

larly

sche

duled

paym

ents1 .

Redu

ced-

paym

ent fo

rbea

ranc

e1Th

e per

iod es

tablis

hed i

n the

term

s of th

e forb

earan

ce ag

reeme

nt (n

ot to

exce

ed 12

-mon

th inc

remen

ts); n

o max

imum

.

Man

dato

ryMe

dical

or de

ntal in

terns

hip/re

siden

cy2,

3

Depa

rtmen

t of D

efens

e stud

ent lo

an re

paym

ent p

rogr

ams3

Natio

nal s

ervic

e2, 3

Activ

e Milit

ary S

tate D

uty2,

3, 9

12-m

onth

incre

ments

(or a

less

er pe

riod e

qual

to ac

tual p

eriod

durin

g whic

h the

borro

wer is

eligi

ble);

no m

axim

um.

Debt

exce

eds m

onthl

y inc

ome4,

5

12-m

onth

incre

ments

; thre

e (3)

year

s max

imum

. Te

ache

r Loa

n For

given

ess2,

3 Pe

riod w

hile b

orro

wer m

aintai

ns fo

rgive

ness

eligi

bility

. 12-

month

incre

ments

. M

anda

tory

Adm

inis

trat

ive

Loca

l or n

ation

al em

erge

ncy7

Milita

ry mo

biliza

tion8

Desig

nated

disa

ster a

rea7

Perio

d spe

cified

by th

e U.S

. Dep

artm

ent o

f Edu

catio

n or g

uara

ntor,

plus 3

0 day

s foll

owing

the p

eriod

.

Repa

ymen

t acc

ommo

datio

n Th

ree-

year

max

imum

for v

ariab

le int

eres

t rate

; Five

-year

max

imum

for in

come

-sens

itive r

epay

ment.

De

ath

Date

lende

r rec

eives

relia

ble no

tifica

tion o

f dea

th to

date

lende

r rec

eives

death

certif

icate

or ot

her a

ccep

table

docu

menta

tion,

not to

exce

ed 60

days

. Th

e per

iod w

hile t

he le

nder

is aw

aiting

a co

mplet

ed lo

an fo

rgive

ness

appli

catio

n, no

t to ex

ceed

60 da

ys.

Teac

her L

oan F

orgiv

enes

s2, 6

Date

lende

r rec

eives

a co

mplet

ed lo

an fo

rgive

ness

appli

catio

n to d

ate le

nder

rece

ives e

ither

a de

nial o

r the

loan

forg

ivene

ss am

ount

from

the gu

aran

tor.

Adm

inis

trat

ive

Borro

wer in

eligib

le for

defer

ment6

Begin

ning d

ate to

endin

g date

of th

e ine

ligibl

e defe

rmen

t. De

linqu

ency

befor

e a de

ferme

nt or

certa

in for

bear

ance

s6 Fir

st da

te of

over

due p

ayme

nt to

the da

y befo

re th

e beg

inning

date

of de

ferme

nt or

othe

r for

bear

ance

type

. Fo

rgive

ness

unde

r Inc

ome-

Base

d Rep

ayme

nt6 60

days

for le

nder

to co

llect

and p

roce

ss do

cume

ntatio

n to d

eterm

ine a

borro

wer’s

eligi

bility

. La

te no

tifica

tion o

f out-

of-sc

hool

dates

6 Da

te bo

rrowe

r sho

uld ha

ve en

tered

repa

ymen

t to da

te firs

t or n

ext p

ayme

nt wa

s esta

blish

ed.

Bank

ruptc

y filin

g6Th

e ear

lier o

f the f

irst d

ate of

over

due p

ayme

nt or

rece

ipt of

relia

ble in

forma

tion t

hat th

e bor

rowe

r has

filed

bank

ruptc

y to d

ate of

disc

harg

e dete

rmina

tion o

r rep

urch

ase.

Date

lende

r rec

eives

phys

ician

’s wr

itten r

eque

st for

addit

ional

time t

o date

lend

er re

ceive

s a co

mplet

e, ce

rtified

loan

disc

harg

e app

licati

on or

othe

r for

m(s)

appr

oved

by

the D

epar

tmen

t, if th

e bor

rowe

r sub

mits

the ce

rtifica

tion t

o the

lend

er w

ithin

90 da

ys of

the d

ate th

e phy

sician

certif

ied th

e app

licati

on, n

ot to

exce

ed 60

days

.

Total

and P

erma

nent

Disa

blilty

6

For a

non-

disab

led co

make

r, the

earlie

r of th

e date

that

the le

nder

rece

ives t

he lo

an di

scha

rge a

pplic

ation

or th

e date

the l

ende

r rec

eives

notic

e fro

m the

guar

antor

that

one c

omak

er is

total

ly an

d per

mane

ntly d

isable

d, to

the da

te tha

t the l

ende

r rec

eives

notic

e of th

e fina

l disc

harg

e dete

rmina

tion.

Spou

ses a

nd pa

rents

of S

eptem

ber 1

1, 20

01, v

ictim

s660

days

from

date

appli

catio

n sen

t to bo

rrowe

r if ap

plica

tion i

s not

rece

ived b

y len

der,

and f

rom

date

guar

antor

rece

ives d

ocum

entat

ion to

date

of de

termi

natio

n.

Repu

rchas

e of a

non-

bank

ruptc

y clai

m6 Th

e per

iod th

at the

loan

was

held

by th

e gua

ranto

r due

to a

claim

purch

ase.

Death

Da

te aft

er m

anda

tory a

dmini

strati

ve fo

rbea

ranc

e due

to re

liable

notifi

catio

n of d

eath

ends

to da

te len

der r

eceiv

es de

ath ce

rtifica

te or

othe

r acc

eptab

le do

cume

ntatio

n, no

t to ex

ceed

60 da

ys.

Clos

ed sc

hool

Perio

d of u

noffic

ial cl

osur

e noti

ce as

spec

ified b

y gua

ranto

r. Cl

osed

scho

ol or

false

certif

icatio

n660

days

from

date

appli

catio

n sen

t to bo

rrowe

r if ap

plica

tion i

s not

rece

ived b

y len

der,

and f

rom

date

guar

antor

rece

ives d

ocum

entat

ion to

date

of de

termi

natio

n.

False

Cer

tifica

tion-

-Iden

tity T

heft6

Date

eligib

ility r

equir

emen

ts se

nt to

indivi

dual

to da

te re

ques

t and

docu

menta

tion r

eturn

ed, n

ot to

exce

ed 60

days

; and

from

date

guar

antor

rece

ives d

ocum

entat

ion to

da

te of

deter

mina

tion.

Delin

quen

cy af

ter de

ferme

nt or

Man

dator

y For

bear

ance

6 De

ferme

nt or

man

dator

y for

bear

ance

end d

ate to

estab

lishm

ent o

f nex

t pay

ment

due d

ate.


Docu

men

tatio

n co

llecti

on a

nd p

roce

ssing

6Da

te bo

rrowe

r req

uests

defer

men

t, fo

rbea

ranc

e, ch

ange

in re

paym

ent p

lan, o

r loa

n co

nsoli

datio

n to

dat

e su

ppor

ting

docu

men

tatio

n is p

roce

ssed

by l

ende

r, no

t to

exce

ed 6

0 da

ys.

60 d

ays f

rom

dat

e ap

plica

tion

sent

to b

orro

wer i

f app

licat

ion is

not

rece

ived

by le

nder

, and

from

dat

e gu

aran

tor r

eceiv

es d

ocum

enta

tion

to d

ate

of d

eter

mina

tion.

Un

paid

refu

nd d

ischa

rge

The

perio

d du

ring

guar

antor

revie

w an

d en

ding

on th

e da

te le

nder

rece

ives t

he gu

aran

tor’s

deter

mina

tion f

or a

borro

wer w

ho re

ques

ts a

revie

w of

a d

enial

de

term

inatio

n. Un

paid

refu

nd6

End

date

of in

itial 6

0-da

y man

dato

ry a

dmini

strat

ive fo

rbea

ranc

e to

rece

ipt o

f com

plete

d dis

char

ge re

ques

t, and

dur

ing p

eriod

of d

eter

mina

tion o

f disc

harg

e elig

ibility

. Ne

w ou

t-of-s

choo

l dat

es a

fter c

onve

rsion

6 Or

igina

l rep

aym

ent s

tart

date

to a

djuste

d sta

rt da

te.

Loan

sale

or tr

ansfe

r6 Fi

rst d

ate

of d

elinq

uenc

y to

date

loan

is so

ld or

tran

sferre

d, if

the

loan

is les

s tha

n 60

day

s deli

nque

nt.

Ineli

gible

sum

mer

brid

ge e

xtens

ion6

Day a

fter e

xpira

tion

of b

orro

wer’s

last

in-sc

hool

defe

rmen

t to th

e 30

th d

ay a

fter f

all cl

asse

s beg

in.

Cure

6 Da

te o

f ear

liest

unex

cuse

d vio

lation

to d

ate

lende

r rec

eives

a fu

ll pay

men

t or n

ew si

gned

repa

ymen

t agr

eem

ent.

Natur

al dis

aster

s, loc

al or

natio

nal e

merge

ncies

, milita

ry mo

biliza

tion6

From

dat

e bo

rrowe

r affe

cted,

not

to e

xcee

d th

ree

(3) m

onth

s for

eac

h oc

curre

nce.

Repa

ymen

t alig

nmen

t-SLS

/Sta

fford

4 Fi

rst p

aym

ent d

ue d

ate

to la

st da

y of th

e lon

gest

appli

cable

Sta

fford

loan

gra

ce p

eriod

.

Note

: Fo

r mor

e det

ailed

info

rmat

ion

rega

rdin

g ea

ch fo

rbea

ranc

e situ

atio

n, p

lease

cont

act y

our l

ende

r.

1 Le

nder

mus

t doc

umen

t the

bor

rowe

r’s re

ques

t, the

reas

on fo

r the

forb

eara

nce,

and

the te

rms o

f the

forb

eara

nce a

gree

ment.

2

For b

orro

wers

only.

3

A re

ques

t, sup

portin

g doc

umen

tatio

n fro

m th

e au

thor

ized o

fficial

(s) in

dicati

ng th

e be

ginnin

g and

end

ing d

ates

, and

a ve

rbal

or w

ritten

agre

emen

t are

requ

ired.

4

A re

ques

t is re

quire

d.

5A

requ

est a

nd su

ppor

ting

docu

men

tation

of m

onth

ly inc

ome a

nd m

onth

ly pa

ymen

ts on

Title

IV e

duca

tion l

oan

obli

gatio

ns, a

nd a

verb

al or

writ

ten

agre

emen

t are

requ

ired.

6

Lend

er m

ust n

otify

the

borro

wer (

or in

dividu

al or

end

orse

r, if a

pplic

able)

and

docu

ment

the b

eginn

ing a

nd e

nding

d

ates

and

reas

on fo

r the

forb

eara

nce i

n bor

rowe

r hist

ory r

ecor

d. 7

Noti

ce fr

om th

e U.

S. D

epar

tmen

t of E

duca

tion o

r gua

ranto

r is r

equir

ed.

8 D

ocum

enta

tion

show

ing b

orro

wer i

s sub

ject t

o a m

ilitar

y mob

ilizat

ion is

requ

ired.

9 Fo

r milit

ary s

ervic

e tha

t beg

ins o

n or

afte

r Octo

ber 1

, 200

7, or

inclu

des t

hat d

ate.

So

urce

: Co

mm

on M

anua

l, Jul

y 200

9


PROTECTING YOUR CREDIT RATING

Beware of Identity TheftIdentity theft is a serious crime. It occurs when your personal information is stolen and used without your knowledge to commit fraud or other crimes. Identity theft can cost you time and money. It can destroy your credit and ruin your good name.

Working with other government agencies and organizations, the Federal Trade Commission (FTC) has developed a Web site www.ftc.gov/bcp/edu/microsites/idtheft// to educate consumers about identity theft. The site provides information about what steps to take, your legal rights, how to handle specific problems you may encounter on the way to clearing your name, and what to watch for in the future.

Establishing Good CreditKnowing and accepting the terms of repayment on your student loan is vital to establishing and maintaining good credit. Here are a few steps you need to follow:

• Keep in contact with your lender at all times. Your lender depends on you for all current information.

• Initiate a repayment schedule with your lender.• Make all scheduled payments on time. If you miss a payment, contact your lender.• If you need to extend or delay repayment obligations, contact your lender.

What Is a Delinquent Loan?If you are willing but unable to make scheduled payments, request assistance from your lender within 30 days of your loan payment due date. If payment is not received, your loan will become delinquent. When your loan is delinquent, the lender, servicer, and the Michigan Guaranty Agency will attempt to contact you by letter(s), telephone, and by contacting your references.

Avoiding DelinquencyIf you are having difficulty making your scheduled student loan payments, contact your lender for possible solutions. You may use the following steps:

1. Review your situation with your lender and ask about deferments for which you qualify.2. Request a forbearance from your lender to either lower or stop your student loan payments for a short

period of time.

What Is a Defaulted Loan?If you refuse to repay your loan or cannot be located, your lender places the loan into default. Your lender will default your loan when it is determined that you have not complied with the terms of your promissory note, or after 270 days of delinquency. After default, your loan is purchased by the Michigan Guaranty Agency for collection. The full amount of the loan, accrued interest, collection costs, and other costs are due and payable to the Michigan Guaranty Agency. For details regarding repayment of a defaulted loan, contact MGA’s Collections Unit at 1-800-642-5626, ext. 60600. If your defaulted loan(s) is held by the U.S. Department of Education, call 1-800-621-3115 or visit www.1800IWillPay.com.

Prot

ectin

g Yo

ur C

redi

t R

atin

g


Consequences of Defaulting If you fail to repay a loan, you will be considered in default, and the following may result:

• Your default status may be reported to a national credit bureau and have a negative effect on your credit rating for seven years.

• You will be pursued for payment by collection agencies.• The entire unpaid amount of your loan, including interest, may become due and payable immediately.• You will lose deferment, repayment, and forgiveness options.• Your wages may be garnished.• Your savings account(s) may be attached.• You may be taken to court if you fail to make satisfactory arrangements and/or payments on your defaulted

loan.• The U.S. Internal Revenue Service and the State Treasury Department will seize any federal and state income

tax refunds you are owed.• You will be assessed collection costs, including attorney fees.• You may not be eligible for future student loans and other federal/state student aid.

Key Points• Students who repay their loans maintain a good credit record. Students who default face serious penalties

including a bad credit rating.• Keep in contact with your lender at all times, even while you are a student. Failure to respond to notices

from your lender can cause your loan to go into default.• Submit written changes of name and address to your lender; otherwise, important mail may not reach

you.• Keep copies of all correspondence until your loan is fully repaid.• Check with your lender if you think you may be eligible for a loan deferment. Even after you begin

repaying your loan, you may enter into situations that will permit you to defer principal payments.• You are legally responsible for the full repayment of your educational loans. You also are fully liable

for the consequences if you default.


GLOSSARY OF TERMS AND RECORD KEEPINGAccrued Interest Interest that accumulates on the unpaid balance of a loan.

Capitalization The process of adding unpaid interest to the principal balance of an educational loan, thereby increasing the monthly payment and the total amount to be repaid.

Consolidation A loan program that allows a lender to pay off a borrower’s educational loans by creating one new loan.

Default Failure to meet the terms of the promissory note or other written agreement. For a loan repayable in monthly installments, a loan is considered to be in default when this failure to repay persists for 270 days.

Deferment A period of time during repayment in which the borrower, upon meeting certain conditions, is not required to make payments of loan principal. In some situations, the federal government will pay the interest.

Delinquency The period which begins when a borrower fails to make the equivalent of one full payment after the payment is due.

Disbursement The transfer of loan proceeds by a lender to a borrower, to a borrower in care of his/her school, to another lender, or to an escrow agent by issuance of a check or by electronic funds transfer.

Disclosure Statement A statement of the actual cost and terms of the loan including interest rate and additional finance charges.

Due Diligence Thorough, extensive, and persistent procedure for servicing and collecting loans by a lender or its lender servicer.

Entrance Interview A loan repayment and debt management counseling session required by federal regulations that is arranged and conducted by a school’s financial aid administrator for students who are receiving their first federally guaranteed student loan associated with attendance at the school. This counseling session must be conducted before the student can receive the proceeds of the first disbursement of any federally guaranteed education loan. Some schools participate in internet online entrance interview programs. Check with your financial aid office to see if this is an option.

Exit Interview A loan repayment and debt management counseling session required by federal regulations that is arranged and conducted by a school’s financial aid adminstrator for students who have received federally guaranteed loans while attending school. This counseling session must be conducted before the student graduates or leaves the school, whenever possible. Some schools participate in internet online exit interview programs. Check with your financial aid office to see if this is an option.

Garnishment of Wages The deduction of a portion of a borrower’s paycheck, with or without the borrower’s consent. A lender, guaranty agency, or the government may take this action to force repayment of a loan that is in default.

Federal Default Fee A fee deducted from the borrower’s loan proceeds prior to disbursement and paid to the guaranty agency that insures the loan. By law the fee cannot exceed 1% of the loan amount.

Forbearance An authorized period of time during which the lender agrees to temporarily postpone a borrower’s principal repayment obligation or to reduce the amount of the payments. Interest payments continue to be the borrower’s responsibility. Forbearances may be granted at the lender’s discretion when a borrower demonstrates good intentions of repaying but is unable to do so.

Glo

ssar

y of

Ter

ms

and

Rec

ord

Kee

ping


Grace Period The period between the time borrowers leave school or drop below half-time study and the time they are obligated to begin repaying their loans — usually six months, depending on the type of loan.

Guaranty Agency State agency or private non-profit institution that insures student loans and administers the Federal Family Education Loan Program for the federal government.

Holder The institution with legal title to a borrower’s loan. The holder may be the lender that originally made the loan, a new lender, or a secondary market to which the lender has sold the loan, or in the event of a default, the guaranty agency.

Interest A fee charged to a borrower for the use of a lender’s money. Interest is calculated as a percentage of the principal loan amount. The rate may remain constant throughout the life of the loan (fixed rate) or it may change at specified times (variable rate).

Lender A financial institution (bank, credit union, or certain state agencies) that provides the funds for students and parents to borrow educational loans. Some schools also are lenders.

Master Promissory Note The promissory note a student signs when taking out a Stafford loan. The Master Promissory Note covers both the subsidized and unsubsidized Stafford loans the student may receive for the same enrollment period. The Master Promissory Note also covers subsidized and unsubsidized Stafford loans the student may receive for future enrollment periods of up to ten (10) years.

Origination Fee A fee charged by the federal government and deducted from loan proceeds before disbursement to partially offset administrative costs of the Federal Family Education Loan Program.

Principal Amount a person borrows (which may increase as a result of capitalized interest) and the amount on which interest is paid.

Promissory Note The legal document borrowers sign when they get an educational loan. It lists conditions under which the money is borrowed and the terms under which borrowers agree to repay the loan with interest. The agreement also includes information about any grace period, deferment, or cancellation provisions, along with the borrower’s rights and responsibilities with respect to the loan.

Secondary Market An organization established to purchase educational loans from lenders. This allows lenders to replenish capital to fund new loans. Selling loans is a common practice among lenders and does not affect the terms and conditions under which the loan was originally made.

Servicer A company employed by a lender, secondary market, school, U.S. Department of Education, or guarantor to perform the administrative tasks that are associated with educational loans.

Subsidized Loan A need-based loan on which interest is paid by the federal government during the in-school, grace, and authorized deferment periods, and (if applicable) post-deferment grace periods, if the loan meets certain eligibility requirements.

Unsubsidized Loan A non-need-based loan on which interest is not paid by the federal government. Borrowers are responsible for interest on all unsubsidized loans from the date the loan is disbursed.


Educ

atio

nal

Loan

Rec

ord

Cre

ate

a re

cord

of y

our e

duca

tiona

l loa

ns b

y re

cord

ing

the

perti

nent

info

rmat

ion

for e

ach

loan

rece

ived

. Per

iodi

cally

det

erm

ine

your

cur

rent

tota

l edu

catio

nal

borr

owin

g as

a r

emin

der

of th

e ex

tent

to w

hich

you

hav

e co

mm

itted

fut

ure

earn

ings

.

D

ate

of

Nam

e of

Loa

n

Scho

ol

Enr

ollm

ent

Inte

rest

Loa

n

Loa

n Pr

ogra

m

Len

der

Att

ende

d Pe

riod

R

ate

A

mou

nt

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$ E

duca

tiona

l Ind

ebte

dnes

s To

tal/S

ubto

tal T

his

Page

(con

tinue

d on

bac

k)


Educ

atio

nal

Loan

Rec

ord

(con

tinue

d)

D

ate

of

Nam

e of

Loa

n

Scho

ol

Enr

ollm

ent

Inte

rest

Loa

n

Loa

n Pr

ogra

m

Len

der

Att

ende

d Pe

riod

R

ate

A

mou

nt

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Ed

ucat

iona

l Ind

ebte

dnes

s To

tal/S

ubto

tal T

his

Page

$

Ed

ucat

iona

l Ind

ebte

dnes

s Pr

evio

us P

age

$

G

RA

ND

TO

TAL

$


Educational Loan Record Contacts

School

Contact Person

Phone Number

Lender

Contact Person

Phone Number

Servicer

Contact Person

Phone Number

Holder

Contact Person

Phone Number

School

Contact Person

Phone Number

Lender

Contact Person

Phone Number

Servicer

Contact Person

Phone Number

Holder

Contact Person

Phone Number

School

Contact Person

Phone Number

Lender

Contact Person

Phone Number

Servicer

Contact Person

Phone Number

Holder

Contact Person

Phone Number


Telephone Call and Correspondence Log

Keep a record of telephone calls and correspondence you initiate or receive regarding your student loan(s).

Date Individual Organization Reason

This material was prepared by the Michigan Guaranty Agency (MGA) of the Michigan Higher Education Assistance Authority (MHEAA) under authority of the Higher Education Act of 1965, as amended, and printed in compliance with Executive Directive 1991-6. MHEAA and MGA comply with all federal laws and regulations prohibiting discrimination and with all requirements and regulations of the U.S. Department of Education.

Michigan Department of Treasury, 3144 (Rev. 11-09)Copies Printed: 20,000 Total Cost: $9,336.13 Cost per Copy: $0.47

educational loan organizer

Documents